In March, ASIC welcomed the changes the big four banks had made to small business loan contracts to improve fairness and transparency after the regulator and the small business ombudsman put a spotlight on fair lending terms.

At that time it signalled it would also be reviewing contracts from smaller providers to make sure they didn't fall foul of unfair contracts law.

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The watchdog says it has been reviewing the clauses of a range of bank and non-bank lenders, including Prospa.

Management said at the time it was ‘‘in the best interests of the company and new investors to postpone the listing and provide a briefing on the matters raised by ASIC in the context of the industry-wide review’’.

On Friday, the business confirmed it was the first fintech to undertake a comprehensive review of its loan terms with ASIC.

The result is removing several clauses deemed to fall foul of unfair contract terms legislation, including stopping Prospa's power to "unilaterally vary" loan terms without giving the borrower 60 days' notice.

The lender has also removed an "entire agreement" clause that absolved it from any responsibility for "conduct, statements or representations made to borrowers about the loan contract".

Borrowers will now also have more freedom to repay loans early without requiring Prospa's consent.

Prospa chief operating officer said in a statement the changes were "industry-leading".

The company had no comment to make about it would attempt another tilt at the ASX now the review was over.

Small business and family enterprise ombudsman Kate Carnell said Prospa's initial public offering attempt had brought the issue of unfair contract terms in the fintech space "to a head".

"It's a great step, but the message here to all other players in the fintech sector is they've got to comply - this isn't a choice," Ms Carnell said.